With increasing public scrutiny and concern over its huge investment and sizeable yearly losses, the Sarawak government-owned hi-tech chipmaker 1st Silicon (Malaysia) Sdn Bhd has come out to defend itself.

This unprecedented and unusual step for the company to explain itself followed the criticism of DAP Bandar Kuching MP Chong Chieng Jen in Parliament last week, which was reported in malaysiakini .

Since its incorporation in 1998 till Dec 31, 2003, the company's accumulated losses amounted to RM2.5 billion.

This practically wiped out its paid-up capital of RM1.827 billion, necessitating the injection of additional capital through new equity and government-guaranteed borrowing sourced largely from abroad.

In a lengthy statement published in local newspapers today under the heading Serving the State and Nation: Why we choose to work for 1st Silicon , three of its senior management executives said the company offered job opportunities previously not available to the people of Sarawak.

"Life in Sarawak has always been pleasant but the limited career opportunities drove away qualified sons of the soil overseas," they said.

The trio were Mohammad Ismail Mustafa, director of supply chain management, Ngieng Sii Jing, director of manufacturing projects, and Stephen Chin Yun Chieh, director of corporate finance.

"Sarawak was experiencing a brain drain, and not willing to settle for anything but the best, the chief minister and his cabinet have gone out of the way to ensure that Sarawak's brain power is retained to enable Sarawak to participate on the global stage with success and not be left behind," they said.

Thus, they added, a high-tech manufacturing centre in Kuching was transformed in the late 1980s with the creation of the Sama Jaya Free Industrial Zone, where 1st Silicon is located.

The company is one of Malaysia's two wafer fabs producing silicon micro-processing chips for the world's telecommunication devices, personal device assistants and computers.

The senior company executives said the state's electronic industry is now firmly established and growth continued with the creation of 1st Silicon, which allowed Sarawak's 'qualified sons to come home'.

The company hires more than 1,000 employees, of whom 80 percent are Sarawakians.

New business opportunities

The executives said the company has also generated new business opportunities and developed new sectors in the local economy to service 1st Silicon such as power, gas, chemical, cleanroom accessories and equipment suppliers.

According to them, the transfer of technological know-how was the result of the experience the engineers brought back home from their previous jobs or on a joint research and development process with local vendors and suppliers.

They disclosed that the company had also been involved in the incorporation of two integrated circuit design houses to improve services. One of the design houses was identified as Integrated Circuit Design Services Sdn Bhd.

This was to provide job opportunities for Sarawakians who have been trained in integrated circuit design to come home and work, they added.

Although they said the plant's facility was designed with a capacity to produce 45,000 wafers per month when fully ramped up, they did not disclose say how much is being produced monthly.

Malaysiakini learned that presently about 16,000 wafers are produced monthly, which, according to well-informed sources, is still way below the break even point of 30,000 wafers per month.

"Production level depends on demand, and without the necessary economy of scale, don't expect it will be able to cover its operating cost," said the sources.

Sales doubled

According to the executives, the company is shipping out products of the 0.25um and 0.18um technology nodes with the majority being products at 0.18um targetting high-end communication products.

They disclosed that sales have doubled since 2002 but gave no indication of the volume and value but said the trend is expected to continue.

However, they added that profitability 'will only be forthcoming in the near future given the magnitude of the investment and the volatile nature of the industry'.

They also disclosed that the company had recently qualified the 0.13um Flash technology which means it can now go into its production.

'The company focuses on niche markets by offering reliable and cost effective embedded non-volatile memory which is ready for production while its high voltage processes is in its development," said the executives.

Industry experts said that it would make more sense for 1st Silicon to maximise its existing facilities rather than invest on more plants and to focus on the needs of what they described as 'the developing world which is still far behind in the application of the latest technology'.

TONY THIEN is malaysiakini's Sarawak-based stringer.